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Chapter 3: Q. a - For Critical Thinking (page 51)

Is there an inverse relationship between the price of cable TV and the number of subscriptions that people purchase?subscriptions Explain

Short Answer

Expert verified

Yes.

Step by step solution

01

Step1. Introduction

Law of Demand states that there exists an inverse relationship between quantity demanded and price of the good, i.e. as the prices increase, quantity demanded falls and vice versa.

02

Step2. Explanation

As the price of subscription increase, it becomes costly for the people to purchase the subscription, and hence they will demand less. At the same time, when prices fall, subscriptions increases.

Hence, we can say, there exists an inverse, negative, relationship between the two.

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Most popular questions from this chapter

Distinguish between changes in demand and changes in quantity demanded

For each of the following shifts in the demand curve and associated price change of complement or substitute item, explain whether the price of the complement or substitute must have increased or decreased.

a.Arise in the demand for a dashboard global positioning-system device follows a change in the price of automobiles, which are complements.

b.A fall in the demand fore-book readers follows a change in the price of e-books, which are complements.

c.Arise in the demand for tablet devices follows a change in the price of ultrathin laptop computers, which are substitutes.

d.A fall in the demand for physical books follows a change in the price of e-books, which are substitutes.

In the market for portable power banks(a normal good), explain whether the following events would cause an increase or a decrease in demand or an increase or decrease in the quantity demanded. Also, explain what happens to the equilibrium quantity and the market-clearing price.

a. There is an increase in the price of carry cases for portable power banks.

b. There is a decrease in the price of devices used to charge portable power banks.

c. There is an increase in the number of consumers of portable power banks.

d. A booming economy increases the income of the typical buyer of portable power banks.

e. Consumers of portable power banks anticipate that the price of this good will decline in the future.

Why do you suppose that prices of barbecued brisket have been rising in

many U.S. cities?

Understand how the interaction of demand

and supply determines the equilibrium

price and quantity
See all solutions

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